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What the overhaul of consumer rights law means

Prompted by the EU, the government is aiming to put the mess of UK consumer regulations into some kind of order. I’ll highlight the major changes and explain how small businesses can prepare for the new regime.

How consumer rights affect small businesses

Whether you sell goods, services or digital content online or in a shop, cafe or other premises, there are a variety of obligations which you have to abide by when dealing with consumers. This means that, even if you have a comprehensive set of terms and conditions, you still need to be aware of the statutory rights of those buying your products as these will trump any written terms. However, getting a clear picture of all the different rules is tricky, as they are spread out across a variety of laws.

The Sale of Goods Act is one of the best known sources of consumer rights, which requires you to refund a customer if any goods are not “as described, of satisfactory quality and fit for purpose”. Other rules ban misrepresentations and misleading or aggressive sales techniques. But the huge growth in e-commerce over the last couple of decades has probably had the most significant effect on consumer rights. The Distance Selling Regulations require retailers who sell online (or over the phone) to provide a “cooling off period” so their customers can decide to cancel the contract and get their money back.

What’s the purpose of the Consumer Rights Bill?

The aim of the Consumer Rights Bill is to “bring together, improve and update consumer law”, consolidating the various strands of piecemeal regulations. As its name suggests, the bill only applies to B2C businesses but will cover all forms of trading, including goods, services and digital content. Businesses would be well advised to ensure their processes are compliant with the new measures.

One of the most noteworthy parts of the Bill is its differentiation of digital content from goods and services. This will essentially bring the consumer rights relating to digital content, such as software, computer games, apps, films and music – whether it’s provided via download or on a physical medium – in line with tangible goods and clear up much of the confusion which exists at present. If you’re providing software, you’ll need to be particularly careful that it doesn’t cause any damage (eg. due to a virus) to hardware or other software, as you’ll be liable to pay compensation to the consumer.

In terms of goods and services, all the current rules will continue to apply but there will also be a new default delivery period of 30 days for goods (unless a longer period is agreed when the contact is formed). There will be statutory rules on refunds and remedies, including an “early right to reject” goods within 30 days. Additionally retailers will need to ensure that their processes are in line with the Consumer Contracts Regulations which complements the Bill.

What are the Consumer Contracts Regulations?

The Consumer Contracts Regulations, which will apply to your business from 13th June 2014, extend the “cooling off period” for any sales which you conduct online, over the phone or away from your business premises, from 7 working days to 14 calendar days. You will also need to offer a model cancellation form to all your customers. If you are selling digital content, you’re required to provide details regarding its compatibility with hardware and software (e.g. if a music download will only work with iTunes). Furthermore, pre-ticked boxes during an online sales process which facilitate extra purchases will no longer be allowed.

Finally, it should be noted that another law, which sits alongside these reforms, prevents traders from making any extra charge to consumers for using different forms of payment (e.g. credit card) beyond the actual cost to the business, and further rules reinforce the ban on any aggressive or misleading sales techniques.

Rocket Lawyer provides a range of terms and conditions documents for small businesses. Also take a look at our related Legal Guide.

Pieta Das Gupta

Pieta has over ten years’ experience as a company commercial solicitor working in law firms and for businesses.As the Head of Legal for Rocket Lawyer UK, Pieta is in charge of legal content and work with the product development team to create the documents and guidance available on Rocket Lawyer.